Posted on: 31 August 2016
When you have little or no credit, it can be hard to prove you have the financial responsibility banks and lenders often require of you to buy a new home. Here are 3 ways you can build your credit quickly so you can by a home, even if you currently have no credit at all.
Pay off medical debt
Medical debt counts as credit, good or bad, depending on whether you have been making payments or not. If you haven't been paying off your medical debt, start now by making minimum payments every month for a few months to show that you can be financially responsible with your current debt. Lenders and banks often look at your most recent debt, and it's not always credit cards or car payments that can keep you from the home of your dreams. Sit down with a lender to see what medical debts you currently have on your credit report so you can start paying them off now.
Get a prepaid credit card
A prepaid credit card is a credit card that you load money onto, then spend freely like a credit or debit card. This card is great to build credit history with because you aren't borrowing money on large interest rates in order to pay bills or make regular purchases. Basically, you are spending your own money in getting this type of card, but you are doing so in a way that reports to credit agencies in a positive way. This quickly helps create a history of financial independence that your lender can appreciate when you're applying for a home loan.
Buy a car
Buy a car on credit if you can afford to, even if you pay it off within just a few months. A car is often one of the largest purchases you will ever make besides buying a home, and showing your lender that you can be trusted to finance a vehicle helps them realize you have the ability to finance another, larger investment as well. When buying a car on credit, make sure your interest rate is comparable to the current low rates for new vehicles for the best selling price. In many instances, you can get an auto loan from the same company who may give you a home loan to further put your credit in better standing.
Your dream home purchase can be made even if you have no credit to your name. By using outlets available to you to help you build credit quickly, you can get into your new home in less time than you would think. Talk to your lender about these and other ways you can build credit so you can be a more favorable candidate for a loan. For more information on how to purchase a home with no credit, talk to a company like SWE Homes.Share